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Oldest US gunmaker files for bankruptcy

28 March 2018

One of the oldest gun manufacturers in the United States, Remington Outdoor, has filed for bankruptcy in order to try and shed some US$700 million worth of debt and absorb the shocks of falling gun sales.

Creditors will also provide a $100 million debtor-in-possession (DIP) loan to finance operations throughout bankruptcy.

In the court documents, Remington Outdoor Co.

Remington, which is owned by private equity firm Cerberus Capital Management, is based in Madison, North Carolina.

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It faced a slew of lawsuits after one of its Bushmaster rifles was used by Adam Lanza in the 2012 shooting at Sandy Hook Elementary School in Newtown, Connecticut. Remington has also been sued by individuals claiming some guns are defective, and voluntarily recalled some of its models.

No one is saying what will happen to the 3,500 or so employees at Remington as it reorganizes.

There is a renewed push for gun control, led by a movement of students, after 17 people-many of them children-were shot dead by Nikolas Cruz at Marjory Stoneman Douglas High School in Parkland, Florida, on Valentine's Day.

But the slump is more of a market correction, according to Brian Rafn, a gun industry analyst with Morgan-Dempsey Capital Management, LLC, who pointed out that the surge of gun sales during Barack Obama's presidency was bound to "come back down to earth". New York-based Cerberus acquired Remington in 2007 and saddled it with nearly $1 billion in debt.

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In 2017, firearm background checks, a good barometer of sales, declined faster than in any year since 1998, when the Federal Bureau of Investigation first began compiling that data. That is partially because a larger percentage of guns in the USA are owned by an increasingly small group of people.

The company still produces guns at a sprawling brick factory in Illion, New York, that has existed since the mid-1800s.

All of this said, firearm background checks, a loose proxy for gun sales, have remained relatively stable in recent months.

BlackRock is a major shareholder in gunmakers Sturm Ruger, American Outdoor Brands, and Vista Outdoor Brands.

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Congresswoman Claudia Tenney did release a statement after Remington declared bankruptcy, and says the company has given assurances that this filing is primarily to restructure their debt and that there will be no loss of jobs. It's also looking into creating new investment funds for investors that exclude firearms makers and retailers.

Oldest US gunmaker files for bankruptcy